Additional Uranium Projects and Termination of Choix copper agreement
VANE Minerals Plc ("VANE" or "the Company") today announces an agreement regarding additional uranium projects in the Colorado Plateau Uranium District of the United States, and also provides an update on the Choix copper prospect in Mexico.
Happy Jack Mine
VANE Minerals (US) LLC ("VANE (US))" has entered into an agreement with private company Happy Jack Minerals covering the Happy Jack Mine and surrounding claims located in San Juan County of south-eastern Utah in the Colorado Plateau Uranium District. The property consists of seven patented lode claims, seven unpatented claims, and 29 unpatented lode claims staked by VANE during the due diligence period, all of which are now included in the agreement.
Under the terms of the agreement VANE (US), has agreed to:
• submit an exploration plan within 6 months of the date of the agreement;
• commence exploration within 6 months of the plan being approved by the local authorities and commit a minimum of $75,000 within 12 months of starting exploration. Expenditures in excess of the minimum shall be applied to future years' work commitments; and
• commit a further $125,000 to surface and underground exploration annually from the end of the initial work commitment to mine feasibility commencing. Expenditures in excess of the minimum shall be applied to future years' work commitments.
The Happy Jack Mine agreement is for an initial period of five years, extendable for a further five years on reaching production. If production does not begin, a sum of $100,000 shall be payable for the further 5 year term. The owner shall grant VANE automatic five year extensions thereafter if production is occurring. The agreement provides for the following payments by VANE (US) to the owners of the Happy Jack Mine and surrounding claims:
• An initial payment of $10,000 on signing the agreement;
• A further payment of $10,000 at the end of the initial work commitment in the event VANE (US) elects to continue with the agreement;
• A payment of $20,000 on completion of the second work commitment;
• A payment of $30,000 on completion of the third work commitment, unless the decision to commence commercial production has been made; and
• payment of an advance royalty of $100,000 to the owner, at the announcement of the decision to commence commercial production.
When production is reached, VANE (US) will pay a production royalty of 5% on minerals mined from within the original areas held by the owner, and a production royalty of 2.5% on minerals mined from the additional areas claimed.
The Happy Jack Mine, operated principally by Atlas Minerals, produced 3.1 million pounds of U3O8 between 1949 and 1982 when, along with most of the mines on the Colorado Plateau, it closed due to low uranium prices. VANE (US) geologists have delineated a resource of approximately 155,000 pounds U3O8 contained in several pods, some of which are accessible via existing mine workings and which could therefore be put into production with minimal development work.
A review of previous drilling results has revealed nine additional exploration targets in which previous drilling intersected ore-grade mineralisation but was never explored with additional drilling or sampling. VANE (US) geologists estimate a potential resource on the property of 1,000,000 pounds U3O8. Additional breccia pipe deposits
The only mines to continue uranium production in the Colorado Plateau past the mid-1980s were the high-grade breccia pipe deposits of northern Arizona where VANE (US) has recently located four new US Lode Mining Claims, thereby adding two additional breccia pipe targets to its existing portfolio of 17 breccia pipe targets. During the past year, VANE has been sampling known ore-bearing pipes at ground surface to develop proprietary geochemical techniques to differentiate barren from uraniferous structures. Using these techniques VANE (US) recently completed geochemical sampling over three of its northern Arizona breccia pipe targets, all of which were found to have indications of uranium mineralisation. Deep drill tests on at least two of the breccia pipe targets are planned for later in 2006. Historically, economic mineralised breccia pipes have contained between 1 million and 6 million lbs U3O8.
Choix Copper Project
Assay results from the six holes completed in December 2005 at the Choix copper prospect in the State of Sinaloa, Mexico, have been received. These results are disappointing and indicate that the strongly mineralised porphyry outcrops at surface lack "roots" and are actually isolated xenoliths or blocks "floating" upon the underlying batholithic rocks.
The highest values found in the drill hole samples, 0.14% copper, illustrates the abrupt decline in copper values from the surface, 1.50% copper, to depth and consequently VANE has now discharged all obligations regarding the Choix property. VANE has no further financial obligations in this respect. The prospect represented a very attractive, easily accessible, undrilled copper target which was inexpensively acquired and quickly tested with the overall expenditure on the project less than $100,000.
As the Company moves forward, its conviction in the continuing strategy of testing a large number of attractive targets quickly and inexpensively remains unshaken. The Company is confident that tests of a number of similar future prospects will provide a high probability of success.
Chairman Michael Spriggs commented: "VANE is pleased to announce the acquisition of additional uranium projects, building on its already strong portfolio. The Company intends to explore the breccia pipe targets by drilling in order to realise the potential resource. Although the results of the Choix copper project have disappointed, they have shown that the Company is capable of effectively turning these projects over cheaply and efficiently. The Company's ability to utilise its Freeport database and the contacts of the principals to create substantial deal flow, together with the cash flow from the Diablito gold/silver project in Mexico, enable VANE to evaluate a large number of prospective projects, and we will continue to do so."